Sales pipelines and non-linear pharmokinetics

December 2, 2013 / Comments Off

When I ran my own business, I had a solid, tried-and-true, 3x pipeline. That was absolutely, 100% the math. For every $3 in prospective sales, we would see $1 in booked revenue, and this was the case for years. Until it abruptly wasn’t. For whatever reason, the ratio started to shift, and we began closing less than 30% of deals.

Clearly it was time to move to a 4x pipeline. If we were going to maintain the same amount of revenue annually, we needed to increase the number of opportunities were were pursuing. So that’s what we did.

Which is why this particular contraceptive doesn’t work for women over a certain weight. Because of non-linear pharmokinetics, you can’t take enough of the drug for it to work if your body mass is above a certain amount.

The reasons for these two different but similar phenomenon (put more of x into the system, which doesn’t generate linearly more y) is the multiplier. It’s an additional variable that we, in our quest to see simplicity where it sometimes is not, forget about. The good news is that these unconsidered variables in other circumstances can sometimes actually generate more value, especially in a knowledge-based business. You can read more about that in this fascinating article by Daniel Rasmus about the Serendipity Economy.